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23 April 2019
Is Africa the next tourism growth frontier?

Is Africa the next tourism growth frontier?

Summary report of a panel discussion at the Africa CEO Forum, held in Kigali, Rwanda, on 25 and 26 March 2019.

12 April 2019
The Opportunity in Banking Consolidation in East Africa

The Opportunity in Banking Consolidation in East Africa

  The East African banking sector has made significant strides in the past several years. From an industry that was once blamed for its exclusion to now being praised for its...

22 March 2019
Belvie: Establishing a consumer goods business in West Africa

Belvie: Establishing a consumer goods business in West Africa

  BeIvie is a Niger-based non-alcoholic beverages manufacturing and bottling group founded in 2014. This case study looks at how, in a relatively short period, Belvie captured significant market share from...

22 March 2019
Trends and Events in Africa 2018

Trends and Events in Africa 2018

2018 has been an interesting year for Africa, with various events and trends becoming visible. 2016 saw the effects of the slowdown of China’s economic growth due to its rebalancing...

20 March 2019
Nigeria’s Opportunity to Enhance the CFTA

Nigeria’s Opportunity to Enhance the CFTA

  Synopsis: The Continental Free Trade Area negotiations should take the concerns of domestic stakeholders seriously, for its own sustainable development.

19 March 2019
Raising The Steaks: Africa’s booming meat industry

Raising The Steaks: Africa’s booming meat industry

  The rapid growth of meat consumption in Africa will provide attractive opportunities for investors, but making production more efficient, protecting the environment and improving the lot of smallholders, pose many...

05 October 2018
Cover story: Sudan: Lifeline for the banking sector

Cover story: Sudan: Lifeline for the banking sector

  Sudan, one of the largest countries in the heart of Africa, has been struggling to stay afloat economically since the US imposed crippling trade and investment sanctions in 1997. The...

04 October 2018
Involving youth in agriculture in Africa

Involving youth in agriculture in Africa

Africa’s youth bulge presents both an opportunity and a challenge. More must be done to involve youth in agriculture as a means of providing employment, say Johan Burger and MD...

27 September 2018
More Singapore firms venturing into “challenging” Africa

More Singapore firms venturing into “challenging” Africa

It is a “long-term” play, say experts, but there is potential in areas like services, infrastructure

27 September 2018
Manufacturing in Nigeria: Status, challenges and opportunities

Manufacturing in Nigeria: Status, challenges and opportunities

  According to the National Bureau of Statistics (NBS), the Nigerian manufacturing sector is dominated by the production of food, beverages and tobacco, with sugar and bread products generating the greatest...

24 September 2018
Africa Rising will Lift Singapore Boats Too

Africa Rising will Lift Singapore Boats Too

If there is one thing that the recent Africa Singapore Business Forum (ASBF) reminded me of, it is what a polarising prospect the continent remains.

07 September 2018
Unpacking South Korea’s engagement with Africa

Unpacking South Korea’s engagement with Africa

  Following the end of the Korean War in 1953, South Korea prioritised its alliance with the United States in pursuit of economic growth and military security. It took more than...

24 August 2018
Africa's a growth market, but it's a long-term play

Africa's a growth market, but it's a long-term play

    INVESTING in Africa is a long-term play, various experts have cautioned, even as one national strategist has identified the continent's digital economy as a brand-new growth area for Singapore.

01 August 2018
Strength in unity from AfCFTA

Strength in unity from AfCFTA

  The African Continental Free Trade Agreement (AfCFTA) offers great opportunities but it will not succeed without collaboration and commitment, says Venkataramani Srivathsan, Managing Director CEO, Africa ...

27 July 2018
Shared Vision

Shared Vision

    BRICSSource: China Daily Asia Weekly Upcoming BRICS Summit seeks to safeguard globalization, boost trade and strengthen cooperation.

20 July 2018
Will foreign banks be beneficial for Ethiopia?

Will foreign banks be beneficial for Ethiopia?

   National Bank of EthiopiaSource: How We Made It in Africa In June 2018, Ethiopia’s new prime minister Abiy Ahmed survived an apparent assassination attempt. The attack was not entirely surprising. Ahmed...

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The global business community – Singapore included - has long seemed divided into two main camps: companies that have committed to Africa, and those still labelling it “too hard”, i.e. too complex to prioritise. But at the ASBF, I detected a different sentiment – a re-imagining of the prospects for some, and one that underscores Singapore’s position as an international business leader.

Singapore is already the largest South-east Asian investor in Africa. As at the end of 2016, Singapore investments into Africa totalled more than S$25 billion, with a compound annual growth rate (CAGR) of 8.5 per cent since 2008. More than 60 local companies already operate in 50-plus African countries.

Some basic numbers indicate why: The continent is home to 1.2 billion people, a number that will grow to 2.5 billion by 2050. Combined gross domestic product (GDP) is already more than US$2 trillion. Africa is unbelievably rich in many resources. In other words, business potential is huge.

The “too hard” side of the African equation also features some big numbers: most of its economies have seen their currencies fall by more than 20 per cent since 2013. A World Bank conference in 2016 heard that 45 per cent of land investments fail in Africa due to community conflicts. In other words, business concerns are understandable.

So, there are still game-changing issues to be addressed. Some are firmly in the continent’s hands; some others rest with potential partners and investors.

Africa’s full potential as a “single market” can be realised with the ratification of the African Continental Free Trade Agreement (AfCFTA), which will create the largest free trade area since the World Trade Organization in 1995. Eleven countries are yet to become signatories, but when they do, the African market will open up dramatically.

Current trade barriers mean there is little advantage to Singaporean companies targeting multiple markets from a single African base. In fact, it’s arguably easier to conduct pan-African business from within the business infrastructure we have here. But once AfCFTA is implemented, most of the barriers will disappear, inevitable teething issues aside. Additionally, a by-product can be an opportunity for Singapore companies to provide tech expertise and solutions within the AfCFTA business environment.

Ultimately, the case for Africa comes down to dealing with its attendant risks – no different than for any other region, developed or developing - rather than being paralysed by the perception of it. But you can only manage risk if you understand where it lies. Currency and counterparty risks probably top the fear factors but, generally, the “failures” I have witnessed come down to due diligence issues:

• Inadequate market analysis and an assumption that business models can simply be transplanted across markets. Ghana, for example, is no more like Mozambique than Singapore is like Indonesia. You have to have boots on the ground.

• Failure to secure the right banking and financing support, and counsel. Companies can go out of business quite literally overnight if this is managed poorly.

• Not catering for the “small things”. African markets will, for the foreseeable future, continue to present infrastructure and logistical challenges we are unaccustomed to in Singapore – for example, we don’t need back-up generators to cater for power outages.

The above is the kind of homework that can be done with the input and insights of organisations such as Enterprise Singapore, the NTU-SBF Centre for African Studies, or consultancy experts like PwC. There is also the option to partner a strong Singapore partner that already has a firm footprint in Africa.

But these organisations and partners cannot help if you have a myopic view of success. You must put in as much effort to grow IN and WITH Africa as you mean to grow through it. Because you would invariably fail otherwise – if not now, then later. Why would such a high-potential region want to have you, or its people want to work for your interests if they are solely self-serving?

It is imperative then on the company to enact a solid plan that upskills and grooms local talent, implement operations in a sustainable manner, and generate value-add in-country and for communities you work with. A former minister of industry, trade and investment for Nigeria put it best at a Nigeria-Singapore business forum a couple of years back. The country, he said, is looking for "productive", not "extractive" investments. I believe this applies for all of Africa.

In the final analysis, risk and reward are just two sides of the same coin – with a significant upside for the company that gets its strategy and planning right. Africa Rising is never going to be a simple upward journey. The opportunity is vast but, for some, understandably daunting. It demands due diligence, strategic planning and responsible growth. All it takes is some re-imagination.

Venkataramani Srivathsan is Managing Director, Africa & Middle East, of Olam International. He is also a member of the Advisory Board of the NTU-SBF Centre for African Studies.This article was first published in the Business Times on 12 September 2018. Republished with permission. Copyright: The Business Times.

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